modifying a prefab instance

To just change the color of a material, you could also add a public Color property to some script on the Cars, and set the material color in the scripts start method, like this:

public class CarScript : MonoBehaviour { public Color mainColor;

 override public void Start()
 {
     base.Start();

     //Use this if your shader supports it
     renderer.material.color = mainColor;

     // Or if not, use this with the appropriate property used by the shader.
     rendererInPrefab.material.SetColor("_TintColor", mainColor);

     //other stuff
 }

This way, you do not have to loose your connection with the prefab, and you can still edit the color for instances individually. You might need to change it if the renderer is located in a child (say, by using GetComponentInChildren). You could also modify it to allow texture changes.

You should drag the prefab to the viewport and then when it appears in hierarchy just change the assigned material (material/element0)from the mesh renderer entry NOT from the detailed material/shader entry that shows the images. Then press ctrl-d and duplicate the prefab in the hierarchy tab and assign a new material.

Be careful not to press apply ! If you press apply in one of your clones everything will become like the clone. This is really handy, but if you have done loads for differentiating the clones then your work will be lost.

So before you start duplicating think very carefully about what you want from these cars in the future . IF you need any script from them or to fine tune the collision mesh or adding something else then you should start differentiating them after you add these things. Another note that if you create a red car and duplicate it in the hierarchy tab the the clone will be red , if you drag the original prefab then it will be the original material assigned.